• WTI declines as a tentative US-Iran ceasefire eased supply concerns and raised prospects for unrestricted Strait of Hormuz shipping.
• ING analysts noted that reopening the Strait offers immediate oil market relief, but a full recovery remains highly uncertain.
• EIA Crude Oil Stock fell by 3.3 million barrels last week, missing analysts' predicted 4.1-million-barrel drop.

West Texas Intermediate (WTI) oil price loses ground for the third successive day, trading around $86.60 per barrel during the early European hours on Friday. Crude oil prices decline on easing supply concerns following reports of a tentative 60-day ceasefire extension between the United States (US) and Iran. This potential geopolitical breakthrough significantly raised prospects for unrestricted shipping through the critical Strait of Hormuz.

According to reports, the agreement would require Iran to clear all maritime mines from the strategic waterway within 30 days. However, traders maintained a degree of caution following a CNN report indicating that US President Donald Trump has yet to officially approve the terms. This hesitation was echoed by Vice President JD Vance, who noted that while the parties are close to a deal, Washington is "not there yet," while concurrently reminding markets that the US remains positioned to substantially set back Tehran’s nuclear program if necessary.

According to ING analysts cited by Reuters, while reopening the strait would offer some immediate relief to the oil market, a full recovery remains highly uncertain. The bank noted that upstream oil production has dropped significantly since the outbreak of the war, primarily because producers were forced to shut in output to manage severe storage constraints. Because of these structural disruptions, ING expects the eventual recovery in upstream production to be a gradual process rather than an immediate bounce-back.

The latest EIA Crude Oil Stocks Change report indicated that US crude inventories fell by 3.3 million barrels last week. Although this marks the sixth consecutive week of inventory declines, the draw was notably smaller than the 4.1-million-barrel reduction that analysts polled by Reuters had anticipated. This weaker-than-expected inventory decline ultimately served to further dampen bullish sentiment across the oil sector.